PANAMA Law and Practice Contributed by: Kharla Aizpurua O., Roberto Vidal and Miguel Arias, Morgan & Morgan
sas financieras ). Licensed banks are regulated by Executive Decree 52 of 2008 – the Single Text of the Banking Law (as amended, the “Banking Law” ), while financial companies are governed by Law 42 of 2001 (as amended, the “Financial Companies’ Law” ). An entity is regulated under the Banking Law if it raises funds from the gen - eral public (through deposits or other means) and uses those funds to extend loans to third parties. Conversely, an entity is regulated under the Financial Companies’ Law if it uses its own funds to extend loans to third parties. 4.2 Underwriting Processes Both licensed banks and financial companies evaluate a potential client’s creditworthiness through the Asociación Panameña de Crédito (APC), a tool used to assess an individual’s credit rating and accurately determine the associated loan risk. Additionally, licensed banks are legal - ly mandated to establish credit and risk com - mittees. These committees are responsible for assessing and approving (or rejecting) loans based on the borrower’s profile and the trans - action’s credit risk. 4.3 Sources of Funds for Fiat Currency Loans In Panama, companies can raise funds from various sources, including loans or equity invest - ments from peers or private equity firms, loans from banks and financial companies, and private or public securities offerings. Lending between peers or by private equity firms does not require licenses or permits, provided these activities do not fall under the definition of “banking business” as defined and regulated by the Banking Law and are not conducted in the ordinary course of business by the lending party. If lending to third parties becomes habitual and part of the ordinary course of business, the entity would be classified as a financial company under the
Financial Companies’ Law and require a license from the Ministry of Commerce and Industry. Equity fundraising may be regulated depending on the target audience. In Panama, public secu - rities offerings are governed by the Securities Law and Agreement No. 2-2010 (as amended) issued by the SMV. Under the Securities Law, public offerings of securities must be registered with the Superin - tendence when the offer or sale is made by an issuer, an affiliate of the issuer, or an offeror of the issuer or its affiliate in the Republic of Pan - ama. An offer or sale of securities is considered to have been made in Panama if it is directed to individuals domiciled in Panama, regardless of whether the offer or sale originated from within Panama or abroad. All securities subject to a public offering, except those exempt from reg - istration with the SMV, require authorisation from the SMV. A registration application and a prospectus regarding the offering must be submitted for approval to the SMV. Exemptions under the Securities Laws include: • (i) sales or offers of securities to persons domiciled outside the Republic of Panama; • (ii) sales or offers of securities made by an issuer, an affiliate of the issuer, or an offeror of the issuer or its affiliate to no more than 25 persons, resulting in the sale of said securi - ties to no more than ten persons within one year; and • (iii) sales or offers of securities made by an issuer, an affiliate of the issuer, or an offeror of the issuer or its affiliate to institutional inves - tors (as defined by Agreement 1-2001 issued by the SMV, as amended).
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